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Enterprise System Support The Business Strategy Of Aldi Commerce Essay

Paper Type: Free Essay Subject: Commerce
Wordcount: 3373 words Published: 1st Jan 2015

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Understanding the importance of Enterprise Systems benefits can be significant in the development of strategy in an organisation, although most organisations have diverse environments and, likewise, diverse benefits. In this way, a classification of benefits as they relate to organisational strategic focus has been developed to provide a greater understanding of the benefits needed to obtain a specific focus.

Business in the world today, have been exposed to the globalization effect mainly driven by the creation of the Internet, significant improvement and growth of business has been proved. The context of the emerging evaluation of Enterprise Systems (ES) as strategic enablers,

“Albrecht Discount” (ALDI), is a discount supermarket chain based in Germany. The chain is made up of two separate groups which operate independently from each other within specific market boundaries. The Aldi group operates about 8,210 individual stores worldwide.

This report critically emphasis the strategic benefits of Enterprise Systems in Business Organisation named “Albrecht Discount” (ALDI).


ALDI Corporate as a discount retailer are active globally through their market presence and supply chain. The corporate responsibility stretches to both the direct and indirect impacts of the business. It is an integral part of business decision making process. The content reflects ALDI’s highest priorities as a member of society and as a business. The foremost responsibility is towards consumers and for the products they sell. What they offer is directly linked to the way they source their products, as well as how they manage their own operations to transport, handle and sell products. People are in the focus of the company.

ALDI recognize and respect the value they add to the business by providing excellent service day after day. they provide value and quality to customers by being fair and efficient in all they do. Aldi’s are committed to the highest standards of responsible behaviour and integrity in all our relationships with customers, business partners and authorities.

ALDI’s Core Values

The business approach is based on three core values which are consistency, simplicity and responsibility.

Consistency leads to reliability. Aldi’s are consistent in dealings with people, product, price and all other aspects of day-to-day professional life. Simplicity creates efficiency, clarity and clear orientation within organisation as well as for their customers.

Responsibility stands for commitment towards people, customers, partners and the environment. It also includes principles such as fairness, honesty, openness, service orientation and friendliness.

Aldi’s expect our employees to comply with the respective national laws and generally accepted business practices consistent with these laws, wherever we operate.


Many of our products are being manufactured in countries where existing labour laws may not be sufficiently enforced. Together with our business partners, we strive to establish and maintain social and environmental compliance standards for our supply chain.

The ALDI Supplier Standards reflect minimum requirements, all business partners to adhere to these standards. They in turn have to apply them to all subcontractors along the entire production process.

Aldi expect business partners to ensure that work performed for them is carried out on the basis of recognised legal employment relationships.

The Management

ALDI Management System governs in detail all aspects of leadership, employee management and personal development. It is well established and known to all employees, relationships are built on the principles of cooperation, honesty, trust, respect, individual empowerment and accountability, mutual support and learning.

The Business Processes

Like any other business organisations, Management is responsible for controlling business outlets, quality, standards, consolidation of payments and order processing also linking worldwide aldi’s retail shop and suppliers.

Business Process Management recognizes that business processes, and the way they are managed, are the key mechanisms that allow the organisation to achieve value to its customer, and because Aldi’s shop are gradually increasing, number of retail shop also increase and obviously all business processes tend to increase, there should be ways of managing these Business processes considering diversity and since Aldi operates world wide.

Technical and Cultural in-line with business strategies should be a matter of concern. Thinking strategically a practical solution for business growth and continuity is introduction and implementation of Enterprise Systems.

Enterprise System

Enterprise systems integrate the firm’s key business processes in sales, production, finance, logistics, and human resources into a single software system so that information can flow throughout the organization, improving coordination, efficiency, and decision making.

Enterprise systems (ES) are software packages that include enterprise resource planning (ERP) software and such related packages as customer relationship management (CRM), and supply chain management (SCM) from vendors such as SAP, Oracle.

These systems help create a more uniform organization in which everyone uses similar processes and information, and measures their work in terms of organization-wide performance standards.

The coordination of the firm’s key business processes allows the firm to respond more rapidly to customer demands.

According to Aldi annual report, (10K report 2009) which provides recommendations on how Aldi can achieve more results by diversifying into new markets as well as retaining loyalty with their existing customer base. Scope: In recent months the retailer is looking to enhance its image and perception by developing a stronger focus on quality of its products, as well as its additional in-store services. (Aldi, 2009) Furthermore, Aldi has expansion plans in opening new stores in higher, more upmarket locations and to expand its product ranges to attract a higher-earning clientele (Aldi, 2009).

Furthermore, the report also focuses on potential asset-lead and market-lead strategies in order to build upon and to communicate their core competencies through innovative marketing techniques, and, in turn, to achieve higher customer loyalty.

The report and business strategy of aldi together envisages the possibility of gaining strategic benefits of Enterprise System when effectively deployed is huge.

Benefits from enterprise systems

Benefits from enterprise systems are realized into the five main dimensions: operational, managerial, strategic, infrastructure, and organizational. Their benefits categories are discussed in more depth below and are used in the Results section to analyze benefits in all five dimensions.

Operational benefits

Operational benefits are usually reflected in cost reduction, cycle time reduction, productivity improvement, quality improvement, and improved customer service.

Managerial benefits

Improved management decision-making, e.g., improved allocation and control of organization’s resources, monitoring of operations, performance improvement and support for strategic decisions.

Strategic benefits

Support for strategic action such as business growth, alliance, globalization, innovation, product differentiation, and external linkages.

IT Infrastructure benefits

Reduced IT costs, increased capability for quick and economic implementation of new applications, and enablement of greater organizational flexibility.

Organizational benefits

Consequences of ES use that make an organization more focused and cohesive, better at learning, and better at executing its chosen strategies. Evidence of organizational benefits includes increased employee morale and satisfaction, greater employee accountability, and the transformation of users from doers to planners with broadened skills.

Benefits from enterprise systems are perceived differently by different stakeholders

As summarized in Table above, that ES benefits are perceived differently by different stakeholders and that it is important to ask appropriate informants about the benefit realization. Operational benefits are observed in many processes by different end-users. The most useful information about managerial benefits is provided by business managers, who have a clearer picture of the impact of the adoption of ES on the overall organisation, including their colleagues’ decision-making. Strategic benefits appear to flow from a broad range of activities in internal and external areas, and are described in terms of general competitiveness, product strategies, and other strategic capabilities. The most accurate informants about these benefits are senior managers such as chief executive officers, since they have a clearer understanding of the competitive position of their organizations. On the other hand, senior IT managers appear to be the most reliable to ask about IT infrastructure benefits. They can speak with authority about IT-related benefits. Finally, organisational benefits are mainly reflected in individual attitudes (e.g. employee morale) and interpersonal interactions. The best informed people to ask about organizational

Benefits are again business managers since they have an encompassing view of how the adoption of ES has affected employee morale and the sense of purpose within individual parts of the organisation.

Operational Benefits

Business managers who know about business value chain processes, and business stakeholder support activities

Managerial Benefits

Business managers who know about different kinds of resources affected, and different levels of decision-making

Strategic Benefits

Senior managers who know about achievement of the various strategic goals

Organizational Benefits

Business managers who know about individual attitudes and interpersonal interactions

Barriers and conditions for the implementation of Enterprise Systems

Enterprise System implementation of the three elements of success is: environmental mature management maturity, as well as the guarantee of capital throughout the implementation of Enterprise System

Before considering the implementation of Enterprise System, companies should consider their own management infrastructure is appropriate. In fact the implementation of Enterprise System the due to the change management concepts and operational practices, business-and low-level personnel in the hardest hit. Internal processes optimization and fairness in the Enterprise System implementation process is the biggest problem encountered. In addition, this does not mean that the implementation of Enterprise System will be able to improve the management level. If management has become a disease, then, Enterprise System can only fuse the real medicine is a business management strategy and internal management staff to enhance the management level.

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Financial barriers should in fact be the biggest barrier. The implementation of Enterprise System prone to millions, tens of millions, for small and medium enterprises, and ultimately to create value or by products, Enterprise System, at best, is an information platform. Enterprise System in the short term, apart from helping to cultivate and to help staff the concept, the negative returns. As for the long-term interests, for the efficiency gains and cost reduction, but also fundamentally corporate governance will produce fundamental changes in the structure of the self-optimization path.

Organizations investing in Enterprise System need to understand that an assessment of benefits at one point in time does not represent the final gain or loss of their investment. No benefits at one time, does not mean no benefits for good. Many benefits may be found at a later stage, in a range of different dimensions. The evaluation of Enterprise System investment needs to take a longitudinal view with different types of benefits planned at different stages.

Enterprise System managers need to understand that further benefits in all dimensions are possible. A one-time gain may not mean an all-time win. Benefits realized at one time point can decrease later. Businesses must continuously evaluate current use and plan for future growth in all dimensions. It is therefore important for business managers to adopt a holistic view of the benefit realization and to manage the different effects in the different dimensions.

Management practices because so many other differences, including company size, industry differences and cultural effects, might have caused the different outcomes.

Cultural barriers:

Corporate culture required to create support for change and to change down to maintain the business environment in order to promote management practices change. Enterprise is a human organisation, and only corporate values and behaviour has changed, and businesses can bring about real transformation and innovation.

When a company has always been to rely on values-driven, while the environment is a fundamental change of the occasion, have taken place in a rapidly changing business environment, traditional values does not change, will lead to is not a serious disaster, that is a severe recession.

Key risks and concerns in implementing Enterprise Systems

Many of the risks and concerns in implementing Enterprise systems are perceived risks more than actual risks. However they must be fully understood and addressed in order for organizations to feel confident in implementing Enterprise systems. These can be categorized as follows:

Security, Loss of control, Reliability, Productivity and Resource

The table following table describe the categories in detail


Risk/ Concern




Information loss

Confidential and competitive

information can be leaked


Information can already be deliberately leaked through a variety of means, including email. Safeguards and education can avoid nadvertent

information leaks.

Network security

Opening systems can

make IT more vulnerable to


There are essentially no additional IT security risks with Enterprise 2.0 – if existing security policies are rigorous

there should be no concerns

Loss of control

Loss of control of

information flows

Executives can no longer

control the flow of

information in organizations.

Perception of current control over information flows are misguided. Healthy organizational cultures are correlated to high levels of unstructured internal


Negative internal


Individuals make negative or inappropriate comments on discussion forums or otherpublic communication.

If desired, systems can be set up so that there are no options for anonymous communication.



unreliable or

incorrectly used

Staff posting incorrect

information or unclear or

misleading instructions

Information is given greater scruitiny by

wider community


Reduced staff


Staff spend too much time

using internal or external

social networking tools

that don’t support business


Policies appropriate for the position in the organization can be established, and usage monitored. Making these tools

inaccessible could prohibit activities that are useful to the business


Bandwidth overused

Overuse of video sharing

sites or other tools can result in additional bandwidth costs

Policies and parameters can be set to guide bandwidth-intensive applications. If

warranted for business reasons additional bandwidth can be purchased.

Risk of not implementing Enterprise System

Increasing difficulty in attracting and retaining talented staff

If organisations are perceived by graduates and young staff as a laggard in adopting new technologies, this can impact the firm’s ability to attract and retain talented people.

Reduced competitiveness

Competitors that are swifter in adopting and gaining benefits from Enterprise approaches may achieve significant advantages in their cost of production, speed to market, and customer reach. These benefits will be extremely difficult to replicate.


Enterprise systems represent an important contemporary phenomenon in the organizational use of information technology. The most distinct differences between an enterprise system and other transaction-oriented systems are that the enterprise system is a package versus a system custom developed in-house (implying long-term dependence on a vendor) and that embedded in the enterprise system are normative business practices (requiring many adopting organizations to undertake some form of process reengineering). To date, collective experience with enterprise systems remains quite poorly codified; many organizations approach the phenomenon with little directly applicable knowledge and skill.

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Whether or not enterprise systems will remain an enduring part of the organizational IT landscape clearly remains to be seen, but, because they have become such a large part of organizational IT infrastructure, they will continue to be a consequential phenomenon for some years to come. Enterprise systems affect nearly all aspects of organizational life, not only at the point of startup but also throughout their operational lives. Indeed, an organization’s enterprise system affects its need and ability to upgrade or convert to more modern technologies. Consequently, we need a framework for understanding and analyzing these systems throughout an experience cycle that includes initial decision making, “development” and implementation, early use, and extended use. The framework outlined in this chapter is a first attempt at an integrated framework for understanding the systems intended to integrate organizations. The key features of this framework include the following.

First, it addresses both the motivated behavior of organizational actors, that is, the goals they are trying to achieve, and the factors outside their control, such as the performance of vendors and the reactions of customers and competitors. Second, the framework allows for both emergence-outcomes that are not deterministic but are influenced by both chance events and human actions-and dynamics-responses to problems and opportunities created by earlier decisions and actions. Third, the framework emphasizes the long-term nature of the enterprise system experience, including maintenance and future upgrades and conversions as major contributors to total costs and benefits. Fourth, the framework understands success as a multidimensional and relative concept and introduces the concept of optimal success to accommodate unintended consequences and external realities that are not fully represented in organizational goals. Fifth, as a process theory, the framework helps explain why organizations

do not always achieve optimal success.

Finally, the framework uses the concept of unresolved risk or variance to explain how errors can have consequences that show up long after the errors originally occurred. This explains why organizations often find it so hard to correct problems and to learn from their experiences with enterprise systems.


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